Commentary and analysis to persuade people to become socialist and to act for themselves, organizing democratically and without leaders, to bring about a world of common ownership and free access. We are solely concerned with building a movement of socialists for socialism. We are not reformists with a programme of policies to patch up capitalism.

Tuesday, July 14, 2015

The New Debt Trap

This report (40 pages) and its executive summary (8
pages) investigates the debts owed by countries as a whole – both their
governments and the private sector – minus the debts owed to them. It
finds that the level of such debts owed between countries has risen from
$11.3 trillion in 2011 to $13.8 trillion in 2014, and predicts that in
2015 they will increase further to $14.7 trillion.Major global debtors, including the US, UK, France, India and Italy,
have been increasing their debts with the rest of the world, whilst
Germany, Japan and Russia have been increasing their surpluses.Debts owed by low income countries are also increasing rapidly, with
Mozambique the most indebted country – public and private sector – in
the world as a proportion of GDP. Lending to low income countries has
trebled since 2008, driven initially by borrowing by countries to cope
with the impacts of the global financial crisis. This has been followed
by an increase in ‘aid’ being given as loans, including through
multilateral institutions such as the World Bank, the emergence of new
lenders such as China, and low interest rates in the Western world
causing private lenders to seek higher returns in developing countries.The report identifies nine countries that are heavily dependent on
foreign lending: Bhutan, Ethiopia,Ghana, Lao PDR, Mongolia, Mozambique,
Senegal, Tanzania and Uganda. These countries are growing faster than
the average for low income countries. However, they are making less
progress in reducing poverty than the average for low income countries,
and inequality is increasing. For example, in Ethiopia between 2005 and
2011 GDP grew by 60% per person, but the number of people living on less
than $2 a day increased by 5.4 million.Read the 8 page executive summaryRead the 40 page report